Eircom set for 'one more bad quarter before it stabilises'
Published 22/02/2013 | 04:00
EIRCOM will have one more bad financial quarter before the business begins to stabilise, chief executive Herb Hribar has said.
Speaking to the Irish Independent, as Eircom released second quarter results, Mr Hribar said that he wouldn't pin himself down in predicting when the telecoms firm will see a return to earnings growth.
However, he said: "We're hitting the low point now in terms of performance. We're stabilising the business."
Eircom's revenue slid 6pc to €361m in the period, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 8pc to €119m.
In its fixed-line business, revenues fell 7pc in the quarter, with EBITDA tumbling 12pc.
At its Meteor mobile division, EBITDA climbed by €2m, although revenue was down 5pc.
The fall in group EBITDA in the latest quarter was still ahead of the rate at which Eircom has cut costs. It said its operating costs fell 7pc in the quarter to €157m. However, the rate of EBITDA decline was lower than the 10pc fall Eircom recorded in the three months to the end of September.
The company also announced yesterday that it was extending its high-speed fibre network. Mr Hribar said he couldn't discount the potential impact of Sky's recent launch of broadband and telephony products in Ireland, but said he believed Eircom's new fast network would lure customers back to the group.
Senior lenders seized control of the Eircom last year following the country's largest ever examinership process. That deal slashed Eircom's debts from about €4bn to €2.3bn. US private equity giant Blackstone is the single largest shareholder in Eircom, which now no longer has an obligation to publicly issue detailed quarterly results.
Chief financial officer Richard Moat said the performance at Meteor is expected to improve further as Eircom improves its existing 3G coverage and rolls out 4G services later this year. He said Meteor added 40,000 new post-pay customers in the last quarter and has added 60,000 in the last 12 months.
"We are making steady progress in our €100m cost reduction programme," said Mr Moat.
It remains Eircom's "firm intention" that the 2,000 redundancies flagged by the company last year will be completed within 16 months. That will bring its headcount to 3,500.
"We intend to make sure we de-risk and be as efficient as we can be," he said.
Mr Moat has previously said that he doesn't believe the current €2.3bn debt pile remains too high for Eircom.
He said yesterday that the debt levels remain more or less unchanged at that figure. The company continues to monitor the markets for opportunities that may allow it to refinance the debt, which falls due in 2017.